Breather for three units

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In order to ensure a smooth supply of urea to the southern States, the Cabinet Committee on Economic Affairs, on Wednesday, approved the continuation of production of urea using naphtha or any other means in three plants — Madras Fertilizers Ltd. (MFL), Mangalore Chemical and Fertilizers Ltd. (MCF), and Southern Petrochemicals Industries Corporation (SPIC).

These alternative sources are to be used until the availability of gas through the pipeline.

* India’s urea imports are already far higher than they were last year, according to data from the Department of Fertilizers.

* Urea imports grew almost six-fold to 9 lakh tonnes in March 2015 compared to the amount imported in the same month the previous year.

* The continuation of urea supply from these three plants will substantially ease the problems of urea supply in the southern States during the ensuing kharif season.

* MFL officials began the spade work for commencing production of urea.

* Fertilizer stocks surges up to 13 per cent.

“The decision has been taken to ensure smooth supply of fertiliser in the southern States. The total requirement of Karnataka, Tamil Nadu and Kerala is 23 lakh tonnes, and the annual production of these three units is 15 lakh tonnes per annum,” said Fertilizers Minister Ananth Kumar.

Apart from these three urea plants, the entire southern region of the country only has two other plants. The closure of these three plants would have meant that the entire southern region’s urea requirement would have had to be imported.

India’s urea imports are already far higher than they were last year, according to data from the Department of Fertilizers. Urea imports grew almost six-fold to 9 lakh tonnes in March 2015 compared to the amount imported in the same month the previous year.

The continuation of urea supply from these three plants will substantially ease the problems of urea supply in the southern States during the ensuing kharif season.

In an earlier meeting of the CCEA in December, it was decided that the State governments concerned —that is, the governments of Tamil Nadu and Karnataka — will not charge VAT or entry tax on the naphtha that enters their state.

Answering a question in the Rajya Sabha during the Budget session, Mr. Ananth Kumar had said that India had 30 urea manufacturing units, of which 27 were gas-based and three naphtha-based. As per the modified New Pricing Scheme (NPS) – III, notified on April 2, 2014, the naphtha units were to be subsidised up to the end of June 2014 or till they converted to a gas-based source, whichever was earlier. Before Tuesday’s announcement, the government had twice allowed these plants extensions.

One of the three plants is government-owned, while the other two are private units.